VI According to the law on auditing, there are specific regulations on conditions for practicing auditing. So in case of choosing an organization that is not qualified to practice auditing to sign an audit contract, will the audited unit be fined? Let’s find out with Pham Consult through today’s article!
Choosing an organization that is not qualified to practice auditing to sign an audit contract, will the audited unit be fined?
According to the provisions of Article 53 of Decree 41/2018/ND-CP regulating sanctions for violations of regulations on selecting auditing firms and practicing auditors to perform audits as follows:
Penalties for violations of regulations on selecting auditing firms and practicing auditors to perform audits
- A fine from 20,000,000 VND to 30,000,000 VND shall be imposed on the unit hiring an auditing firm in cases where the auditing firm is not allowed to conduct audits according to the law.
- Fine from 30,000,000 VND to 40,000,000 VND for units hiring audit firms that are not qualified to provide audit services according to the provisions of law.
- Fine from 40,000,000 VND to 50,000,000 VND for audited units that do not conduct mandatory audits of financial statements, completed project settlement reports, and consolidated financial statements , general financial statements and other audit work in accordance with the law on independent auditing and other relevant laws.
Accordingly, choosing an organization that is not qualified to practice auditing to sign an audit contract, the audited unit may be subject to administrative fines ranging from 30,000,000 VND to 40,000,000 VND.
What conditions must an auditing practice organization meet?
Conditions for issuance of Certificate of eligibility to conduct business in auditing services are stipulated in Article 21 of the Law on Independent Auditing 2011 as follows:
– A limited liability company with two or more members, when applying for a Certificate of eligibility to conduct business in auditing services, must meet the following conditions:
+ Have a Business Registration Certificate, Enterprise Registration Certificate or Investment Certificate as prescribed by law;
+ Have at least five practicing auditors, of which at least two members must contribute capital;
+ The legal representative, Director or General Director of the limited liability company must be a practicing auditor;
+ Ensure legal capital according to Government regulations;
+ The capital contribution of organizational members must not exceed the level prescribed by the Government. The representative of an organizational member must be a practicing auditor.
– When applying for a Certificate of eligibility to conduct business in auditing services, a partnership company must meet the following conditions:
+ Have a Business Registration Certificate, Enterprise Registration Certificate or Investment Certificate as prescribed by law;
+ Have at least five practicing auditors, of which there must be at least two partners;
+ The legal representative, Director or General Director of the partnership must be a practicing auditor;
– When applying for a Certificate of eligibility to conduct business in auditing services, a private enterprise must meet the following conditions:
+ Have a Business Registration Certificate, Enterprise Registration Certificate or Investment Certificate as prescribed by law;
+ Have at least five practicing auditors, including private business owners;
+ The owner of a private enterprise is also the Director.
– Branches of foreign auditing firms in Vietnam, when applying for a Certificate of eligibility to conduct business in auditing services, must meet the following conditions:
+ Foreign auditing firms are allowed to provide independent auditing services according to the laws of the country where the foreign auditing firm’s headquarters is located;
+ Have at least two practicing auditors, including the Director or General Director of the branch;
+ The Director or General Director of a branch of a foreign auditing firm is not allowed to hold a management or executive position in another enterprise in Vietnam;
+ The foreign auditing firm must send a document to the Ministry of Finance ensuring responsibility for all obligations and commitments of the foreign auditing firm’s branch in Vietnam;
+ Foreign auditing firms must ensure to maintain capital not lower than the legal capital level according to Government regulations.
– Within six months from the date of registration for audit service business, the audit firm or branch of a foreign audit firm in Vietnam shall not be granted a Certificate of eligibility to conduct audit service business. must go through procedures to delete the audit service business line.
Can an auditing practice organization contribute capital to establish another auditing firm?
According to the provisions of Clause 4, Article 20 of the Law on Independent Auditing 2011 on types of auditing firms and branches of foreign auditing firms in Vietnam as follows:
Types of auditing firms and branches of foreign auditing firms in Vietnam
…
- Auditing firms are not allowed to contribute capital to establish other auditing firms, except in the case of contributing capital to foreign auditing firms to establish auditing firms in Vietnam.
Accordingly, auditing firms are not allowed to contribute capital to establish other auditing firms, except in the case of contributing capital to foreign auditing firms to establish auditing firms in Vietnam.
Thus, through the article on Pham Consult, we have explained to you more about the conditions in choosing auditing organizations. Hope the above information will help your work.
